The Life of a Small Landlord

Published: January 15, 1995

(Page 3 of 4)

The total monthly rent from that building was then $1,100, barely enough to pay for heat and other monthly expenses. That meant Mr. Perez had to begin a campaign of capital improvements to legally justify raising rents to profit-making levels. He accomplished that, but is proud that four of the original eight tenants have stayed on, even with the higher rents. Because the building is a better moneymaker as well as because of a general increase in values in the neighborhood, Mr. Perez says he thinks the property may now be worth as much as $150,000.

He next bought a three-unit building at 804 Freeman Street for $28,000 in 1986. That was the building for which he was offered $95,000.

His last building, at 936 East 169th Street, was bought with a partner, the owner of a local hardware store, in 1991. Each man put up $50,000 for the seven-unit building. Mr. Perez says it may now be worth $150,000.

These numbers suggest his net worth has tripled. He also has very little debt, just five more payments of $217 on the last building. (He also makes monthly payments of $1,040 on a two-and-a-half-bedroom house in the Bronx's Soundview section with his wife, Jannette, and their two children.)

What Mr. Perez represents is a property owner whose income is eroding, in the face of some stiff new challenges. Moreover, his cash flow is inherently unpredictable, dependent as it is on poor people paying him regularly and keeping apartments occupied.

And he is quick to say that he differs from farmers in that his product is not supported by government subsidies, as are corn and peanuts, but instead is kept cheap by the rent stabilization system.

As an example, he points to two identical six-room apartments at 1245 Woodycrest. For one, he gets $660 and for the other he gets $397. The lower price is not enough for proper maintenance, he says. "It destroys the desire you have to try to make everything nice," he said.

But rent regulation is not as big a problem as landlord complaints would suggest, he acknowledges. At the same address, he gets $502 from a tenant who pays rent regularly and is tidy. "Let's face it; we're not on Park Avenue," Mr. Perez said. "I prefer to take a little less and keep a good tenant."

Frank P. Braconi, executive director of the Citizens Housing and Planning Council, said that in poor areas, property owners' returns are limited more by people's low incomes than by rent ceilings. "In many cases the landlord can't get the regulated rent," he said.

But then there is the problem of tenants who do not like to pay rent at all. Mr. Perez says he has one tenant who pays $388.48 for a six-room apartment on Hoe Avenue. Each year, he says he takes her to Housing Court for back rent. She then agrees to pay a lump sum of $2,000 or so, and to pay the rest of the debt at $50 a month. She does this for a while; then the whole cycle starts again.

"This could drive you to kill a person," Mr. Perez said.

His lawyer says that despite Mr. Perez's frustration, it is exceedingly hard to persuade him. "I have to play the role of bad guy and push him to evict," he said.

Indeed, Mr. Perez goes fishing and on picnics with some of his tenants. Many send him Christmas cards, and he is often invited to parties in tenants' apartments.

"Sometimes I don't pay exactly on time, but he never gets angry," said Maria Rodriguez, who has lived in his Freeman Street building for five years. "He says O.K."

Cassandra Vernon, a spokeswoman for the Department of Housing Preservation and Development, said there are a relatively small number of violations in Mr. Perez's buildings, all minor. One, at Hoe Avenue, for example, is for failure to mark floors with painted numbers. THE BIGGEST PROBLEM

Such small landlords' biggest problem over time is that they cannot afford the major renovations needed to keep buildings running. "These buildings are on the edge at best," said Mark Willis, president of the Chase Community Development Corporation, a unit of Chase Manhattan Bank. "This guy can't hold that building together forever by continually patching it."

In particular, Mr. Perez has postponed getting a new boiler for the Hoe Avenue building, both of which were built in 1905. He says even the boiler salesman will not guarantee that the $22,000 expense will save energy. So he keeps patching cracks in the old steel, doing the welding himself. "It's a big decision to make," he said.

Other spending is a result of rough treatment by tenants themselves. For example, Mr. Perez said, one tenant has broken his apartment lock three times. "If the tenant breaks it 20 times, I still have to take care of it," Mr. Perez said. He said if he took this tenant to court, it would cost him $800 and he might lose. A new lock costs $50.

The bigger expenses have all shot up too, Mr. Perez said. Real-estate taxes exceed $10,000 at Hoe Avenue, compared with $1,600 in 1978. Repairs for all the buildings are no less than $10,000. Heat runs about $17,000. Sanitation tickets, almost always caused by neighborhood youths' overturning garbage cans, reach $3,000 a year. Fire and other insurance would be unavailable had not small property owners banded together and bought as an association: it runs $6,000 for all four buildings.